UK Gambling Operator Share Prices Surge

UK gambling operators, including Entain, Flutter Entertainment, Rank Group, and Evoke plc, saw their share prices rebound on 30 October after escaping a rumored tax increase in the Autumn Budget 2024. While initial fears centered on a potential Remote Gambling Duty (RGD) hike to 50%, one of the highest rates in Europe, the Chancellor ultimately announced no changes to gambling taxes. The industry welcomed the news, viewing it as a reprieve that could stabilize operations and avoid further losses to black market operators.

UK Gambling Operator Stocks Rise as Industry Escapes Tax Hike

Shares of major UK gambling operators rallied after Chancellor Rachel Reeves opted not to increase taxes on the gambling industry in the Autumn Budget 2024. Earlier in the month, speculation by The Guardian’s Rob Davies hinted at a multi-billion pound tax raid targeting the gambling industry, sparking concerns over a Remote Gambling Duty (RGD) rate increase to 50% for high-risk gaming products. However, Reeves’ decision to forgo these changes has provided short-term relief to the industry.

Key Points:

• UK gambling operators avoid a major tax hike in the Autumn Budget 2024, boosting share prices.
• Speculation of a 50% Remote Gambling Duty hike had previously wiped £2bn from gambling stocks.
• The UK government will consult on unifying gambling taxes into a single rate in 2025.

According to Richard Moffat, CEO of OLBG, the rumored increase in RGD could have resulted in higher costs for operators, likely leading to reduced consumer offers and potentially driving players to the black market. “When this happens, punters consider switching to the black market, where friction is lower because player protection is non-existent and taxes are not always being paid,” Moffat explained.

Government to Review Remote Gambling Duty in 2025

Although the budget did not introduce new gambling taxes, the government announced plans to review the structure of remote gambling taxes in 2025. According to a 170-page government document released post-budget, the UK plans to simplify the tax system by unifying the three current taxes: Remote Gambling Duty (RGD), General Betting Duty (GBD), and Pool Betting Duty (PBD).

Under the current system:

• RGD is levied on online gambling at 21%, increased from 15% in 2019 to compensate for revenue losses following the ban on Fixed Odds Betting Terminals (FOBTs).
• GBD applies at rates between 3% and 15% depending on betting type.
• PBD is charged at 15% for pool betting outside of horse and dog racing.

As a result of these various rates, operators may face a standardized tax rate, potentially at 21%, which could increase taxes on several forms of online sports betting. However, the government has not clarified its plan for implementing these changes, leaving the industry in anticipation of further announcements in 2025.

Industry Relief Amidst Broader Budget Concerns

While gambling operators may have avoided a worst-case scenario, experts caution that the budget did not necessarily benefit the business sector overall. Jamie Walters, CEO of QiH Group, remarked that the absence of a tax hike on gambling was welcome news, but other budget elements, like increased National Insurance contributions for employers, may challenge smaller operators.

In addition, Neil Roarty, head analyst at ClickOut Media, commented on the broader impact: “This will come as a welcome surprise for the industry, and also for consumers, who would have been forced to shoulder the cost on behalf of bookmakers.” He noted that the government shifted its focus to the tobacco and vaping sectors, avoiding the gambling industry this time around.

Future Implications for the UK Gambling Market

While UK gambling operators benefit from short-term relief, the proposed tax unification could present challenges in 2025 if a single rate structure results in higher costs. A standardized 21% rate across all remote gambling channels, for example, could represent a significant change for online sports betting operators. As the government continues its efforts to simplify the tax structure, operators are preparing for possible adjustments.

The industry’s response to the budget highlights a delicate balance between regulation and market stability. With gambling stocks rebounding, operators remain vigilant about future reforms and the implications of unified tax rates.

The UK gambling industry’s relief at avoiding a tax hike in the Autumn Budget 2024 has sparked a resurgence in share prices, marking a temporary reprieve amid ongoing discussions about tax reform. While Chancellor Rachel Reeves held off on new taxes, the government’s commitment to review the structure of gambling taxes next year suggests potential changes. For now, UK gambling operators can focus on stabilization and growth, while preparing for the possibility of unified tax rates in the near future.